How do you calculate CPM?
CPM stands for Cost Per Mille, which translates to the cost per one thousand impressions in digital advertising. It is a commonly used metric to determine the cost of reaching a thousand impressions on a particular ad platform. To calculate CPM, follow these steps:
Determine the Total Cost: Identify the total cost of the advertising campaign or a specific ad placement.
Count the Impressions: Determine the total number of impressions generated by the ad. Impressions refer to the number of times users display or view the ad.
Apply the Formula: Divide the Total Cost by the number of Impressions, and then multiply the result by 1,000.
The formula for calculating CPM is as follows:
CPM = (Total Cost / Impressions) * 1,000
For example, if your advertising campaign cost $1,500 and generated 500,000 impressions, the calculation would be:
CPM = ($1,500 / 500,000) * 1,000 = $3
Therefore, the CPM in this example would be $3.
CPM is commonly used to compare and evaluate different ad campaigns or placements' cost efficiency. It helps advertisers understand the relative cost of reaching their target audience and make informed decisions regarding ad spend allocation. Keep in mind that CPM is specific to the cost of impressions and does not factor in other metrics, such as click-through rates or conversions.
